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China Auto Sales Slump in March

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GuruFocus.com
·3 min read
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Auto sales in China tumbled 48.4% in March as compared to the same period a year ago. The outbreak of the novel coronavirus (Covid-19) and resulting shutdowns led to the drastic fall in demand. This follows February, in which auto salse were down 79%.

According to the China Association of Automobile Manufacturers (CAAM), the combined sales of SUVs, sedans and minivans stood at just over 1 million units. On the other hand, vehicle sales comprised of trucks and buses saw sales fall 43.3% to 1.4 million units.


Total new electric vehicle sales in China, which includes battery-powered electric, plug-in hybrid and hydrogen fuel-cell vehicles, amounted to 53,000 units (down 53.2% year-over-year). The given figure excludes Tesla's (NASDAQ:TSLA) electric vehicle sales in China.

Tesla bucks the trend

Tesla recorded stunning March sales in China in spite of coronavirus outbreak. The automaker sold 10,160 units, as reported by the China Passenger Car Association. The month also marked the highest ever monthly sales. The company delivered approximately 30% of the battery electric vehicles sold in China in the reported quarter.

Considering the pandemic, the company has ramped up home delivery services to its customers so as to enable smooth deliveries. In addition to this, the company is offering "contactless test drives," enabling the customers to schedule an appointment to test drive the vehicles. The customers can unlock the vehicle by using Tesla's mobile applications.

General Motors

U.S. automaker General Motors (NYSE:GM) recently reported China auto sales for the first quarter on April 3. Company's sales were weak in the region, as it delivered 461,700 vehicles, down 43.3% on a year-over-year basis. GM cited the Covid-19 outbreak as the reason for the decline. With the exception of Cadillac, all major brands registered sales declines.

The company is using innovative sales channel and techniques so as to reach out to customers and boost sales. Livestreaming and touch-free vehicle services were introduced across all of company's major brands.

Looking ahead

According to CAAM, China's auto sales are projected to decline by more than 10% in the first half of the year. For the whole year, decline of as much as 5% is estimated if the pandemic is controlled effectively before April.

The ongoing Covid-19 crisis has hit the automotive industry with low demand both in the U.S. and European markets as well. As such, carmakers could be counting on China to drive recovering sales volume and top line growth, as the country is managing to flatten the virus's growth curve.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.